RCM Liability / ITC Statement Introduced on GST Portal

The Reverse Charge Mechanism (RCM) is one of the most critical pillars of the GST framework, shifting the tax liability from the supplier to the recipient. Over time, mismatches, non-reporting, and incorrect disclosures under RCM have been some of the most common compliance issues faced by taxpayers. To address these challenges, the GST portal has introduced a dedicated RCM Liability/ITC Statement, enabling taxpayers to track, verify, and reconcile their reverse charge obligations and corresponding input tax credit (ITC) with greater accuracy. This development marks a major step toward strengthening compliance, improving transparency, and reducing disputes between taxpayers and the GST authorities.
      

The primary aim of the new RCM statement is to provide taxpayers with a centralized and automated mechanism for reviewing all their reverse charge-based tax liabilities. Traditionally, RCM liabilities had to be manually computed and recorded, creating significant room for human error. Many businesses faced difficulties reconciling their inward supplies liable under RCM with various other records.
The new statement consolidates all RCM-related data in one place, enabling taxpayers to verify taxable value, tax liability, and ITC status in a structured manner. It also enables the tax administration to track RCM compliance more effectively and identify discrepancies or under-reporting with greater ease.
      

The RCM statement comprises several important components that assist taxpayers in understanding their position relating to reverse charge. It compiles data from GSTR-2A, GSTR-2B, and self-reported information, presenting a consolidated view of supplies that may attract RCM.
The statement typically displays the supplier’s details, nature of supply, applicable rate of tax, and whether the transaction falls under mandatory or optional RCM categories. It also displays any eligible ITC that the taxpayer can claim once tax under RCM has been paid through cash. This consolidation makes it easier for businesses to validate transactions and ensure correct reporting in GSTR-3B.
      

One of the major advantages of the RCM statement is its ability to reduce mismatches between inward supply data and actual tax liabilities. Earlier, taxpayers often missed reporting certain RCM transactions or incorrectly classified supplies, leading to notices, audit queries, and penalties. With the portal now highlighting all potential RCM transactions, businesses can cross-check their records and ensure that their tax payments and ITC claims are accurate.

This improved visibility also helps businesses identify supplies that were mistakenly excluded or wrongly included under RCM. By eliminating guesswork, the new statement significantly increases the reliability of taxpayer data.
      

Several sectors—such as goods transport (GTA), legal services, security services, renting of residential property to registered entities, and certain raw materials—are mandatorily covered under RCM.
Businesses operating in these sectors frequently struggled with manual tracking of invoices and categorization of inward supplies. The newly introduced statement highlights such transactions in a streamlined manner, helping taxpayers identify taxable entries and ensure timely discharge of liability.

By automating identification of RCM-linked supplies, the portal reduces the dependency on manual classification and lowers the risk of missing mandatory RCM obligations.
      

The RCM Liability/ITC Statement also improves the transparency of ITC claims associated with RCM. Under GST, ITC on RCM can be claimed only when the liability is discharged through the electronic cash ledger.
With this new statement, taxpayers can see whether the system has recognized their tax payment under RCM and whether the corresponding ITC has been recorded. This ensures that taxpayers do not mistakenly claim ITC prematurely or fail to claim ITC on time.

The centralized display of ITC availability is particularly helpful for businesses with high volumes of inward RCM transactions.
      

Reconciling RCM entries in GSTR-3B with data reflected in GSTR-2A and GSTR-2B has historically been a challenge for businesses. The new statement bridges this gap by providing a unified view, simplifying the reconciliation process.
Taxpayers can now compare what is auto-populated versus what they need to manually report, ensuring that all liabilities are correctly included in GSTR-3B. This not only saves time but also strengthens the taxpayer’s internal accounting practices.

By supporting accurate reconciliation, the RCM statement reduces the likelihood of Departmental notices and scrutiny assessments.
      

With the introduction of the RCM statement, audits and departmental assessments will become more structured and data-driven. Officers can now cross-verify RCM liabilities easily using the system-generated information, reducing subjective interpretations.
The statement acts as an audit trail that captures all inward supplies that may attract RCM, making taxpayer evaluation more transparent. It will also act as a key document for internal statutory audits conducted by companies, ensuring that auditors can independently verify the completeness of RCM disclosures.

Overall, this new feature enhances regulatory oversight and improves the accuracy of taxpayer reporting.
      

The introduction of the RCM Liability/ITC Statement offers several clear advantages to taxpayers. It minimizes manual errors by auto-identifying transactions liable under RCM. It provides better visibility into ITC eligibility and ensures timely compliance by highlighting missing entries.
The consolidated view saves time, reduces the administrative burden of reconciliation, and enables businesses to quickly identify discrepancies. Additionally, by offering a more systematic approach to RCM compliance, the statement lowers the risk of penalties, interest, and departmental queries. Ultimately, the new system enhances confidence and accuracy in GST reporting.
      

Despite its benefits, the new RCM statement also creates new responsibilities for taxpayers. Businesses must ensure that their accounting and ERP systems correctly classify RCM transactions so that portal-generated data matches their internal records.
There may be initial mismatches requiring manual review, especially if historical data is inconsistent or suppliers have misreported invoice details. Taxpayers will need adequate training to interpret the statement correctly and integrate it into their monthly compliance workflows. Over time, as systems mature, these challenges are expected to diminish.
      

The introduction of the RCM Liability/ITC Statement on the GST portal represents a significant milestone in improving RCM compliance, strengthening data accuracy, and enhancing transparency for both taxpayers and authorities. By providing a consolidated, automated view of all RCM obligations and related ITC, the statement reduces errors, minimizes disputes, and streamlines monthly reporting.
This new feature not only improves accountability but also brings much-needed clarity to one of the most complex areas of GST law. As businesses gradually adapt to this tool, it is expected to become an integral part of compliance and reconciliation processes, helping to build a more efficient and robust GST ecosystem.
      

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